#$meli

Yesterday was a perfect example why I rather let the market narrow down my watch-list rather than do it discretionally.  Cypress Semiconductor (CY) was on my list, but I decided not to put the order in because I felt that the float was too large and that the semiconductor sector was extended.  Mid-day yesterday a buyout rumor hit the wires and CY at one point was up 10%.  There's a lot of randomness in trading, and while we might have a feeling of which stock has the best chance of being the biggest winner for the week, we never really know.  Long term, the biggest winners share certain characteristics that make a difference, but in the short-term none of that matters. All my buy orders had an exact buy time which was 10:30 am, out of 23 names only three triggered after that time, 1 (DLTH) triggered before 10:30 am. My list today is a lot longer than I would like it to be, the recent 6-week consolidation is the reason why I have so many names. Many stocks like the market have been moving sideways marking time. I have an interest in the stocks below if and only if they go through yesterday's high plus .10-cents.  I consider these swing long ideas with a shelf life after they trigger of 1-10 days. ATSG, XPO, NSM, CRUS, SNCR, MELI, TWOU, OSK, ROST, MIDD, LOCO, TWTR, VG, CYBR, MGA, SON, AR, ELLI, MGT, ERII, GV, ININ, CPA, MPET, CGNX, SFLY, TWLO, YNDX, CHGG, LC, ICON. If I wanted to narrow down the list and not allow the market to do it for me, then I would prioritize the list based on their float, the smaller the float the higher in the list it goes. My opinion and outlook are subject to change as new information comes in.

Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at [email protected] or 646-480-7463.

See How I Translate My Tweets & Blogs Into Actual 3rd Party Verified Trades

Work With Me

WNR - Western Refining absolutely DESTROYED EPS estimates, reporting Q4 $1.19 ex-items against a $1.04 estimate on revenue of $3.02B vs $2.49B estimate. Shares up nearly 5% in the pre and yes, I own this and HFC! B*A*N*G!!

PKLI - Parent company of Popeye's Louisiana Kitchen trading down 4% after the fried chicken king lowered forward guidance.  

GOGO - Gogo trades up 7.5% on the OptionsHouse extended hours platform after an EPS bear on stronger revenues and increased guidance.

CRM - Salesforce reported inline EPS, raised revenue guidance & said free cash flow was $332M up 22% year/year, shares explode through 52-week highs, trading up 12%.

AVGO & ELX - Avago & Emulex will combine in a deal that pays ELX shareholders $8 per share, a level that Emulex trades at here, up some 25% overnight.

CYBX - Cyberonics & Sorin SpA agreed to merge, both companies up double digits on the news.

One of the very real problems stock traders face is knowing where to focus their attention. Some traders are restricted to certain sectors or sets of stocks, but, even then, quantitative screens can be a useful first step. For traders who have access to the entire universe of stocks, there are still easily over a thousand candidate names, once we’ve filtered for reasonable volume and a decent amount of trading activity. Where to start?

I’ll write more on this soon, but one useful place to start is with a list of short-term relative strength leaders. At the end of this post you will find a screen that has been very useful to me over the years, both for swing trading and daytrading. Even if you are a longer-term “hands off” investor, it may still make sense to look at a list like this, just to make sure you know what is going on in the market–most people read things about the market and other peoples’ opinions of the market, but we can learn about the market by reading the market itself–valuable perspective, that.

Consider this a starting point for idea generation. For practical trading, I’d go through the list and remove those names that are very overextended (LNKD?), and perhaps put them on another list to watch for trades at a later date. (If the market fails, some of these leaders will offer spectacular shorts. A list like this is not just a shopping list for long positions!) Personally, I’d focus my attention on names that are consolidating (e.g., TREX, TMH, THC–what is it with the T’s??) and perhaps look to buy them on breakouts. Also, you might notice some friends from last week on this list–very interesting to see how things come together.

(If you find a list like this useful, we do publish this list, and several other quantitative screens in my daily research with Waverly Advisors.)

Download (XLSX, 432B)